Only buy it if four things line up: the financing, the zoning, the tenant and the team. The zoning part is easier than it used to be. Ontario's More Homes Built Faster Act, 2022 lets most urban lots with a house hold up to three residential units, according to the Province of Ontario. That one rule turned a lot of plain Hamilton bungalows into possible income properties.
Possible is the key word. Most bungalows I look at pass one or two tests and fail the rest. The ones that pass all four are the ones I'd buy.
I'm Sandy MacKay. I bought my first investment property in Oshawa in 2012. I've been buying, renovating and running rentals ever since. Here is how I run this test on a bungalow before I'd tell anyone, including my own family, to buy one.
Lever one: can the money carry the build?
Most people check if they can buy the house. Fewer check if they can pay for the unit after they own it.
Those are two different loans. The purchase is the easy part. The build money is where deals die.
There's a federal tool that helps owners here. The secondary suite refinancing program started in January 2025. It lets eligible owners refinance up to 90% of the home's value, including the value the new unit adds, on homes worth up to $2 million. Read the rules for your own situation with your lender. Eligibility matters.
My rule is simple. If you need everything to go perfectly to fund the build, you can't afford the build. Keep a cushion. Renovations in older Hamilton houses find surprises behind the walls.
Lever two: does the house allow the unit in real life?
The law says three units. The house might say one.
This is the mistake I see most. A buyer reads about the provincial rule and assumes any bungalow works. Then they find out the basement has 6-foot ceilings. Or there's no good spot for a separate entrance. Or the lot is too narrow to reach the back for a garden suite.
Before you make an offer, walk the basement with a tape measure. Look for a side door or room to add one. Check where the water and power come in. Ask a designer or builder what the Ontario Building Code will need for fire separation and exits. That walk-through tells you more than the listing ever will.
If you want to see how unit counts change the value of a building, our Hamilton duplex, triplex and fourplex report shows median asking price per unit by building size and neighbourhood.
Lever three: who will actually live there?
A unit is only worth what someone will pay to live in it. And who that someone is changes by street.
A basement unit near a hospital or a campus draws a different renter than one on a quiet cul-de-sac on the Mountain. Some streets suit a single working person. Others suit a small family who wants the yard.
I don't have one citywide rent number I trust for basement units. Rents vary too much by street and finish. Here's what I watch instead. I pull current listings for similar units within a short walk. I check how long they've been sitting. A unit that rents in a week tells you more than an average ever will.
Then I run the numbers using our underwriting standard. It shows how we work out net operating income, debt coverage and cash-on-cash return, with our expense assumptions written down. Use real rent. Not hopeful rent.
Lever four: who is on your team?
This is the lever people skip, and it's the one that costs the most.
You need a designer who knows the code. A builder who has done legal units before, more than once. A lender who understands what you're building. And someone to manage the tenant after the dust settles.
I built Found Spaces Property Management because I saw too many good deals go bad after closing. The buy was fine. The operating wasn't.
My takeaway: a bungalow with a basement unit is one of the best first rentals in Hamilton, but only when all four levers work. Three out of four is a pass.
If you're comparing this to a building that already has two units, read how I test a Hamilton duplex before buying. The math is different when the second unit already exists.
Why I like this play for people building over years
Real estate is a wealth tool first and a deal second. A bungalow you add a unit to can be the first door in a portfolio. You learn the build, the tenant and the numbers on a small scale.
The second property is easier. The third is easier again. That's how most portfolios I've seen actually start. Not with a big building. With one house that someone made work harder.
You can see more of how I think about investing on my page, and browse current Hamilton investment properties we're watching.
Questions people ask
Do I need a building permit to add a basement unit in Hamilton?
Yes. A new legal unit needs a building permit from the City of Hamilton. The permit process checks things like fire separation, exits and ceiling height under the Ontario Building Code. Skipping it can hurt your insurance and your resale.
Will a lender count rent from a unit that isn't built yet?
Usually not in full. Many lenders only count rent from a unit that exists and is rented. Ask your lender how they treat future rent before you make an offer, not after.
Is a bungalow better than a duplex for a first investment?
It depends on what you want to learn. A duplex gives you rent from day one with less build risk. A bungalow can cost less to buy and lets you add value yourself, but you carry the renovation risk.
Talk it through with me
If you've found a Hamilton bungalow and want a second set of eyes on the four levers, I'm happy to look at it with you. Book a call with our team and bring the listing.